By the end of the first quarter of 2024, PDVSA adopted a new contract model that requires 50% of the value of each cargo in spot crude oil transactions to be paid up front in Tether (USDT).
Brief overview:
• Venezuela’s state-owned oil company has accelerated the pace of Tether (USDT) payments in the face of intensifying U.S. sanctions.
• By the end of the first quarter of 2024, PDVSA has adopted a contract model requiring 50% upfront payment in USDT.
• PDVSA now requires new clients involved in oil trading to hold cryptocurrency.
According to the latest reports, Venezuela’s state-owned oil company PDVSA has taken steps aimed at increasing the use of digital currencies and stablecoins such as Tether (USDT) in crude oil and fuel exports, amid tightening U.S. sanctions against Venezuela.
PDVSA Consider usingTether (USDT)
Last week, the U.S. Treasury Department issued a directive to customers and suppliers of Petroleos de Venezuela (PDVSA), requiring them to reduce trading volumes by May 31. This measure will make it more difficult for Venezuela to increase its oil production and exports, because all companies must obtain individual authorization from the United States before conducting oil transactions with Venezuela.
PDVSA has been gradually shifting its oil sales to Tether’s U.S. dollar-pegged stablecoin USDT since last year. The value of USDT is pegged to the US dollar, ensuring its stability.
The shift is accelerating with the reimposition of oil sanctions aimed at reducing the risk of sales proceeds being seized in foreign bank accounts due to those sanctions, according to people familiar with the matter.
PDVSA’s transition to digital currencies is accelerating as oil sanctions are reimposed, according to people familiar with the matter. The move is aimed at reducing the risk of sales proceeds being frozen in foreign bank accounts due to sanctions.
Last week, Venezuelan Oil Minister Pedro Tellechea told Reuters that they were considering digital currencies as the preferred payment method for some oil contracts.
According to Pedro Tellechea: "We have different currency payment options, depending on what is stipulated in the contract."
The U.S. dollar remains the main currency used for trading in global oil markets, and although cryptocurrency payments are emerging in some countries, they remain relatively uncommon.
Last year, PDVSA faced a corruption scandal that revealed about $21 billion in unexplained oil export receivables in recent years, partly related to past transactions involving various cryptocurrencies.
Last year, PDVSA was hit by a corruption scandal that revealed about $21 billion in unsourced accounts receivable from oil exports in recent years, some of which were related to previous transactions involving multiple cryptocurrencies.
Tellechea took over the national oil ministry in the wake of the scandal. Under Tellechea, Venezuela's oil exports have surged. Exports surged to about 900,000 barrels per day in March, the highest level in four years, driven by U.S. license sales.
PDVSA requires 50%to be paid in USDT
By the end of the first quarter of 2024, PDVSA will convert a large number of spot oil transactions (excluding swaps) into a contractual framework requiring upfront payment of 50% of the value of each cargo in USDT. .
Additionally, PDVSA stipulates that any new client wishing to participate in oil trading must hold cryptocurrency held in a digital wallet. According to one source, PDVSA not only implemented a requirement for new customers to hold cryptocurrencies, but also applied the requirement to some existing contracts, even if those contracts did not explicitly stipulate the use of USDT for transactions when they were signed. .
One trader said: “As required by PDVSA, Tether (USDT) transactions often fail to pass the review of the trading compliance department, so the only solution is to cooperate with intermediaries to conduct transactions.”
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